How to Determine Value and Make an Offer on a Home
Advice to Help You when You're Buying a Home
If you've been home shopping for awhile you might feel confident that you understand the market value of houses in your area. But it's not unusual for even seasoned home buyers to feel a bit queasy when it's time to make a formal offer. Here are some tips that can help you get the best deal when you're buying a home.
Low balling it
Come in too low and you'll run the risk of alienating the seller. That's fine if low is all you'll go, or if the property is truly overpriced, but it can create problems with future negotiations. Some seller's take a lowball offer as a personal insult and may not be as anxious to deal with you as they would have been had you made a more realistic first offer.
Come in too high and you may not find the seller's low point.
If you really want the house, and if competition is high, an offer near or above the asking price might be a must.
No matter what your strategy is, you should have a very good idea of the home's market value before you make an offer.
If you're working with an agent
A seller's agent won't become too involved in your pricing dilemma, because it's the agent's duty to get the best deal for the seller. However, most agents will run lists of comparable properties that have sold and give them to you to study.
Think distant here-the agent will give you material facts, but probably no opinions.
A buyer's agent will help you determine the best price to offer. The agent will run comparables for you, and should become involved in offer strategies.
Advertising gives you a feel for average asking prices, but your focus should be on sales prices. You'll find them recorded as explained above or on multiple listing recaps of sold properties.
What about tax values?
Tax valuations are not a good measure of a property's market value. Your community might have a general guideline, such as tax value = 80% of market value, but the figures are not usually reliable. Ask your local tax assessor for details about your specific area.
Take a look at a home's tax value, but never assume it matches the market value of the property.
Other factors that affect price
Analyze each home's condition and compare it to others on the market, but your final offer will likely involve a good deal of gut instinct. Is it the house for you? If you've been searching for a home for awhile, you will probably know the answer to that question the minute you walk in the door.